Last month, in a little-noticed speech before a North Carolina technical community college, President Obama compared the severe economic challenges faced by the country today to a period more than 50 years earlier when the United States faced another dire threat. Back then, in 1957, the Soviet Union had launched a satellite known as Sputnik and had beaten the United States into space.
As he steps to the podium to deliver his State of the Union address before Congress and the nation tonight, Obama hopes to rally the country again at another “Sputnik moment,” as he called it, a time of great insecurity and challenges from global competitors. Whether or not he refers specifically to Sputnik tonight, the president will make the case that the United States must regain its competitive edge as it did back then when it overtook the Soviets in the space race.
The way to turn U.S. fortunes around, Obama will argue, as he did in his North Carolina speech, is through a combination of “investments” — more spending — as well as budget cuts to programs, however popular, that he will contend are no longer affordable.
Obama is expected to say his number one focus is making sure the country remains competitive and is creating new jobs, while lowering the trillion-dollar federal deficit in a “responsible way” over the long-term and making government “leaner and smarter.” He will call for more spending on education, research and development and the nation’s infrastructure — new spending that Republican leaders vow to cut.
But the president has decided not to endorse his fiscal commission’s recommendations to raise the Social Security retirement age and take other steps to reduce benefits. Moreover, administration officials said Obama is unlikely to specifically endorse any of the deficit commission’s recommendations in his speech, but cautioned that he would not rule them out altogether, The Washington Post reports. That Obama has invoked such a searing moment in the nation’s history as Sputnik to make his case is especially telling because it underscores the stakes of today’s economic challenges. Sputnik’s launch was “a wake-up call,” Obama said. It galvanized the United States “to boost our investment in innovation and education — particularly in math and science.”
“Fifty years later,” he said, “our generation’s Sputnik moment is back. This is our moment.”
While the comparison to earlier challenges may well be powerful rhetorically and even inspirational, Obama’s State of the Union address comes at a difficult moment, politically for the White House. Looking on tonight will be the new GOP speaker of the House, John Boehner, and a chamber filled with newly-elected hard-charging partisans who won campaigns by promising to cut, substantially, the size of the federal government. At the same time, an unsettled electorate, reeling from the effects of stubbornly high unemployment and a $14 trillion national debt, will be tuning in.
And even as Obama’s own poll numbers are improving in the wake of the deals he cut on taxes and unemployment benefits during the lame duck session of Congress as well as his inspirational speech following the shootings in Tucson, the White House knows how quickly a president’s political fortunes can change.
The stakes for the president are exceptionally high tonight, as the country awaits his vision for economic recovery. “This is his last chance to stake out a position of him being the person who cares about the future and them [Republicans] being the Neanderthals,” said Jeff Faux, who founded the liberal think tank the Economic Policy Institute. “The next State of the Union — January 2012 — will be all politics. Nobody will believe a word that anybody says.”
Faux and others on the left fear that Obama may not go far enough to emphasize the need for more government spending to jumpstart the economy, although news that Obama will not suggest tampering with Social Security has heartened liberal groups. They worry about the impact of Obama’s recent moves to reassure the business community — from his appointment of former JPMorgan Chase executive William Daley to be chief of staff and his choice of General Electric Co. CEO Jeffrey Immelt to head his outside group of economic advisers, to his call for a cost-benefit review of government regulations.
“It’s all about the balance between austerity or budget cutting versus job creation,” AFL-CIO chief of staff Thea Lee noted in an interview with The Fiscal Times. “We have a very strong view that we need to shush up about austerity and put the focus on job creation and infrastructure investment. That will get robust growth going which will help us pay down the deficit.”
“Both Democrats and Republicans are putting too much emphasis on deficit reduction right now and I don’t take them very seriously because of the tax cuts for the wealthy that happened at the end of last year,” she added.
few years we have to get the deficit and the debt under control.”
But moderates and deficit hawks say the president would be making a huge mistake by giving short shrift to the threat to the economy and the budget of the long-term deficit. “I think you’ve heard words like ‘meltdown’ and ‘tsunami’” to describe the coming problems, said former Sen. Pete V. Domenici, R-N.M., who co-chaired a debt reduction task force of the Bipartisan Policy Center. “It’s gotten to the point where it’s not a question of whether we can sustain the programs that Democrats and Republicans want. It’s a question of whether we have a sustainable American economy across the board.”
“I didn’t expect a ringing endorsement of the commission,” said Alice Rivlin, the former Congressional Budget Office director who served on both the president’s deficit commission and the Bipartisan Policy Center taskforce. “I do think he will talk about the deficit and his earnestness about dealing with it … I think he’s got to have a balance, and we’ll see how he structures it. He’s certainly talking more now as though he’s giving a lot of emphasis to [spending in] the short run, but that doesn’t necessarily mean he won’t get serious about the long run as the debt ceiling approaches.”
“If we are going to have jobs and growth over the next few years we have to get the deficit and the debt under control,” Rivlin said.
Even as liberals press Obama for more spending, Republican lawmakers are adamant that a clamp must be put on spending to get the debt and deficit under control. As if to underscore that point, Obama's speech will come just hours after the House is to vote on setting spending for the rest of the year at pre-recession levels. That resolution, largely symbolic, would put Republican lawmakers on record in favor of cutting $100 billion from Obama's budget for the current year as the party promised in last year's campaign.
“With all due respect to our Democratic friends, anytime they want to spend they call it investment,” GOP Senate leaderMitch McConnell said on Fox News Sunday. “I think you will hear the president talk about investing a lot … We've got a huge spending problem here. We've had over a trillion dollar annual deficit each of the last two years.”
“We'll take a look at his recommendations; we always do,” McConnell added. “But this is not a time to be looking at pumping up government spending in very many areas.”
Rep. Eric Cantor, R-Va., the House majority leader, expressed similar sentiments. “What we've said is our Congress is going to be a cut-and-grow Congress; that we believe we've got to cut spending, we've got to cut the regulations that have stopped job growth,” he said on NBC’s “Meet the Press.”
“When the president talks about competitiveness, sure, we want America to be competitive. But then when he talks about investing … when we hear ‘invest’ from anyone in Washington, to me, that means more spending,” Cantor added.
But R. Bruce Josten, executive vice president for government affairs at the U.S. Chamber of Commerce, said that “the framework of competitiveness” for the speech is a “good” approach. Noting that the nation’s roads, bridges and highways are crumbling, Josten said the chamber supports more spending on infrastructure and even supports a fuel excise tax, he said because, “standing still is falling behind — you can’t do nothing.”
Such sentiments may give Obama an opening that he is looking for as he urges lawmakers to find areas in which they can work together to spur creation of new jobs amid tough economic times while working to contain the long-term debt. If the chamber and organized labor, two groups that historically have had diametrically different agendas, can agree on the need for more spending on infrastructure, then perhaps some progress can be made this year on striking a balance between spending in certain areas and cutting in others.
But battle-scarred veterans of budget wars are not hopeful. Nobody wants to sacrifice their pet projects. And without some shared sacrifice, the possibility for progress on the most difficult issues all but disappears. The AFL-CIO’s Lee was candid in saying that labor would support cutting programs that aren’t cost-effective. When asked for examples, she chuckled and said: “Everybody else’s program — not mine.”
Robert Reischauer, president of the Urban Institute and a former director of the Congressional Budget Office, said that in order to be successful tonight, Obama must attempt to rally all sides to the economic and budget challenges. “I assume he will reach out to the Republicans and say that to be successful this has to be a joint enterprise,” Reischauer said in an interview. “That we shouldn’t lock ourselves into constraints. In other words, everything should be on the table. And that notwithstanding the need to reduce the deficit, all of this needs to be put in the context of the aftermath of the Great Recession.”
Fasten Your Seat Belts! An Even Tougher Deficit Plan (The Fiscal Times)
Cooking the Books: The 2010 Deficit Was $2.1 Trillion (The Fiscal Times)
Infrastructure Bank Faces Questions on Size, Funding (The Fiscal Times)